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October 17, 2005

Another storm would hit recovery: execs

by Sam Savage

SAN ANTONIO (Reuters) - Another hurricane in the U.S. Gulf
of Mexico would affect the recovery underway from Hurricanes
Katrina and Rita, industry executives led by ConocoPhillips
Chairman James Mulva said on Sunday.

A tropical depression forming on Sunday 155 miles southeast
of Grand Cayman Island was expected to become a tropical storm
or hurricane in the Gulf later in the week, according to the
U.S. National Hurricane Center.

"Obviously, the United States we don't need another
hurricane," Mulva told Reuters. "It certainly could have an
impact on the production and the refineries that are up and
running today and it certainly would have an impact on the
recovery."

The executives were attending the annual meeting of the
American Petroleum Institute, of which Mulva is chairman. As
the executives talked over drinks at a reception, the impending
storm, Tropical Depression 24, was a leading topic of
discussion.

"If Lady Luck smiles on us there won't be a third
hurricane," said API President Red Cavaney. "Probably no one is
more sensitive to the weather in the Atlantic Ocean or the Gulf
than the people in this industry."

On Friday, the U.S. Minerals Management Service reported 67
percent of the Gulf oil production remained shut after Katrina
crossed the Gulf before striking eastern Louisiana, Mississippi
and Alabama in August.

One refining executive, who asked not to be identified by
name, said some private weather forecasts showed the new storm
was targeting the U.S. Gulf Coast somewhere between western
Florida and eastern Louisiana.

In addition to the risk of possible direct damage from the
hurricane, the refineries' hydrogen supply chain is especially
vulnerable to possible damage. The hydrogen, which is used to
reduce sulphur content, is made from natural gas.

Further damage to natural gas supply infrastructure could
cause refineries to cut back production, the executive said.

A total of 56 percent of the Gulf's natural gas output was
shut on Friday, according to the MMS.